NEWS: Home Prices Are Going Up Again, Stick to your budget or increase it?

Although this price-rising topic has been constantly discussed over the past years, it seems like now there is a need to analyze every angle such as why, how and what to do? In a recent article on CNBC, Carmen Reinicke goes over what to do on either increasing or sticking to your budget when buying a property. 

Pre-pandemic, to be a qualified buyer wasn't so complicated as it is nowadays because there is so much competition when trying to buy a house. 

“Four years ago, an ‘A’ buyer was someone who was pre-qualified for a loan, had 3% down and could go out this weekend and buy a home,” said Copeland, who is also president of the industry association Greater Nashville Realtors. “Now, an ‘A’ buyer has all cash.”

And now since the competition over properties is so high, some buyers are even willing to put an offer without seeing the property in person and waiving inspections. 

On the other side, a large amount of Americans are holding and waiting because they believe that this has to start decreasing in the near future.

Americans are aware of the struggles they face in buying a home. More than 70% of U.S. adults believe the housing market is currently in a bubble, and more than half say it’s a bad time to buy a home, according to a survey of more than 7,000 adults from Momentive.

In some cases, experts say that it makes sense to increase your budget because the possibility for reward is high. You just simply have to plan to reduce expenses in other ares of your life to make up for that price stretch. 

It can make sense in some cases to stretch your budget, according to Marguerita Cheng, a certified financial planner and CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland.

“There are situations when I have told people it’s okay to stretch, but just understand the impact that’s going to have on other areas of your life,” she said.

However, be mindful of how feasible this is because if you would have to go into situations like borrowing from retirement money, it perhaps doesn't make sense to stretch your budget for buying a home.